The local bourse tracked firmer global markets on Friday, with the rand trading at its best level since early February at R17.60/$ after an inflation gauge closely watched by the Federal Reserve (Fed) came in at its lowest in nearly two years. The FTSE/JSE All Share Index (ALSI) gained 2.20% for the week, while the rand rose 6.50% in July to outperform its emerging market counters.
The Dow Jones closed 176 points higher on Friday, while the S&P 500 and the Nasdaq gained 1% and 1.90%, respectively as investors considered the most recent round of company earnings and economic data. The US core personal consumption expenditure (PCE) price index rose 4.10% in June 2023, the least since September 2021. PCE inflation rose 0.20% m/m, in line with economists’ expectations. This data, coupled with robust GDP statistics suggest that the Fed’s monetary tightening is working to cool off the economy, leading to the anticipation of a halt in rate hikes. For the week, the Nasdaq increased by 2.10%, the S&P 500 gained 0.80%, and the Dow added 0.40%.
Germany DAX rallied on Friday, gaining approximately 0.30% thanks to a 3% jump in shares of BASF. Other significant European indices fell, with the pan-European STOXX 600 falling the most by 0.30% as investors closely examined the policy choices made by key central banks.
The Hang Seng rose 1.56% on Friday, extending gains for the third session while approaching its highest level in over seven weeks, driven by a rally on Wall Street as investors were optimistic that a soft landing in the US is within reach as inflation eased further. The outcome of the Politburo meeting last week in China, which pledged to begin a countercyclical policy and keep to a cautious monetary strategy and proactive fiscal support, was well received by traders, which saw the Hang Seng rise 4.40% for the week. However, the Nikkei fell 0.40% on Friday while the yen struggled for direction after the Bank of Japan maintained its ultra-low interest rates policy but changed its language to make its yield curve control policy more flexible.
